Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
In a recent paper, Levine, McAdam, and Pearlman (2007) propose a new type of interest rate rule, which they denote a Calvo-type rule. The Calvo-type interest rate responds to the discounted sum of current and future rates of inflation. We show that a Calvo-type rule can be derived from a very different assumption than the one used by Levine, McAdam, and Pearlman (2007), namely a preference for interest rate smoothing. In addition to giving an alternative rationale for the Calvo-type rule, we provide additional empirical support for the specification.